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The stock rallied this week and is on track for the best month in a year after a series of long-term sales agreements during President Donald Trump's trip to the Middle East. That followed a tariff detente between the US and China and an earnings season that showed Nvidia's biggest customers remain full-steam ahead on capital spending related to artificial intelligence infrastructure, where the chipmaker dominates.
The stock has now advanced 43% from an April low and is less than 6% from where it closed on Jan. 24, the day before the emergence of DeepSeek's R1 model sparked fears that cheaper AI development would hurt sales, sending Nvidia and other technology stocks tumbling.
'This season showed that the hyperscalers continue to increase their estimates for what they're going to spend, and Nvidia remains the primary beneficiary of that capex,' said Robert Ruggirello, chief investment officer at Brave Eagle Wealth Management. 'Everyone wants off the train before the party stops, but I don't know why they expect it to stop.' With respect to spending on AI, 'I think we're in the second inning of a nine-inning game.'
Since the start of the month, Nvidia has blown through both its 50-day and 200-day moving averages, positive technical signals for both its near- and long-term momentum. The rally has added about $1 trillion in market capitalization since its April low, pushing it ahead of Apple Inc. in market capitalization. At $3.29 trillion, Nvidia is now second only to Microsoft Corp.'s $3.37 trillion among the world's biggest stocks.
Nvidia's latest rally marks a stark turnaround from the biggest drawdown in the stock since 2022. At its low last month, the chipmaker's shares had fallen 37% from a January all-time high amid concerns that Big Tech's chip-buying binge was set to cool and trade hostilities between the US and China threatened a key market.
Instead of pulling back, tech giants upped the ante. Microsoft Corp. (MSFT) and Alphabet Inc. (GOOG, GOOGL) pledged to spend even more next year, while Meta Platforms Inc. (META) raised its forecast for capital expenditures on the back of AI-related demand tailwinds. Along with Amazon.com Inc. (AMZN), capital expenditures for the four companies are projected to reach nearly $330 billion in 2026, up 6% from estimated spending this year, according to the average of analyst estimates compiled by Bloomberg.
While risks of a negative shift in US trade policies with regard to China remain, Wall Street has been encouraged by new business opportunities in the Middle East.
Bank of America (BAC) on Wednesday raised its price target on Nvidia to $160 from $150 and reiterated its buy rating on the stock. Analyst Vivek Arya estimated commitments for an infrastructure project in Saudi Arabia reported this week could generate as much as $5 billion annually for Nvidia and competitor Advanced Micro Devices Inc. and help offset lost sales as a result of chip export restrictions on China.
Wall Street remains almost uniformly positive on the stock, as 87% of the analysts tracked by Bloomberg recommend buying, and it trades 20% below the average analyst price target, making for the second-highest implied return among Magnificent Seven stocks, behind Alphabet Inc.
Meanwhile, the valuation on Nvidia shares has staged a comeback from the cheapest relative to anticipated profits since 2019, but it remains below the long-term average. After the shares briefly traded under 20 times earnings estimated over the next 12 months, they are now priced at 28 times, compared with an average of almost 35 times over the past decade, according to data compiled by Bloomberg. The S&P 500 Index carries a multiple of 21.6.
Nvidia is expected to grow revenue 54% in its 2026 fiscal year, which finishes at the end of January. The company is due to report it's next batch of earnings after the market close on May 28. Revenue growth in the S&P 500 is expected to be 4.4% this year, according to Bloomberg Intelligence.
'There's usually a cost for owning the kind of growth Nvidia offers, but the valuation isn't far from multi-year lows or the overall market, which is a testament to how attractive the investment profile is,' said Andre Bakhos, president of Ingenium Analytics.
'Right now all the metrics are playing out in Nvidia's favor: the technical strength in the stock, the valuation, and the growth profile, especially with new markets in the Middle East. That just shows you how hard it is to break a trend when the fundamentals are so sound.'
Tech Chart of the Day
China's long-moribund tech sector started 2025 with a bang, but as the year's first quarterly earnings season got underway this week, investors got a wake-up call. Alibaba Group Holding Ltd. shares plunged their most in more than a month Friday after disappointing investors who anointed the e-commerce leader one of the frontrunners in the DeepSeek-inspired AI boom.
Top Tech News
Michael Burry's Scion Asset Management liquidated almost its entire listed equity portfolio in the first quarter, while taking on fresh bearish wagers on Nvidia and China-related stocks before President Trump launched a trade war and roiled global markets.
Microsoft CEO Satya Nadella on how AI will remake every company — including his.
Nintendo Co. aims to transition from one Switch per family to one per person, encouraging households to have multiple Switches, with new models sold frequently and old ones handed down to others.
On the long list of crypto companies that have been hacked, there are plenty of examples of financial losses that are much more painful than what Coinbase Global Inc. appears to be facing from the attack it disclosed on Thursday. Yet this one stands out.
Elon Musk's artificial intelligence chatbot Grok blamed unsanctioned changes to its system for responses this week that included controversial theories about 'white genocide' in South Africa.
Earnings Due Friday
No major earnings expected
—With assistance from Charlotte Yang, Claire Che and Luz Ding.
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